Jobless rate falls to 7.8%, but not without issue

President Barack Obama, right, at Cleveland State University on Friday. Republican presidential candidate Mitt Romney, left, in Abingdon, Va.

By Ann Belser Pittsburgh Post-Gazette

The federal Bureau of Labor Statistics employment report issued Friday morning was better -- and more controversial -- than many economists expected: Unemployment had dropped to 7.8 percent in September from 8.1 percent in August and total nonfarm payroll employment rose by 114,000.

As the penultimate unemployment report before the Nov. 6 presidential election in which incumbent Democrat President Barack Obama will face the Republican challenger, former Massachusetts Gov. Mitt Romney, the numbers took on added importance. Republicans both decried how lousy the jobless numbers were and suggested that they were rigged in the Democrats' favor.

Congressman Mike Kelly, R-Butler, during a morning news conference at the Westin William Penn Hotel, Downtown, said, "When we look at the jobs report, we say, 'OK, there's a little bit of an uptick there,' but how badly did we game it?"

That echoed unsubstantiated comments made earlier on Twitter by Jack Welch, former CEO of General Electric: "Unbelievable jobs numbers ... these Chicago guys will do anything ... can't debate so change numbers."

U.S. Sen. Pat Toomey, R-Pa., who had scheduled the local news conference a day earlier, added that the report was not good enough. "As soon as you start to look closely at these numbers, this is not what a recovery looks like," he said, echoing the comments of Mr. Romney on Friday.

Nonpartisan economists defended the honor of the Bureau of Labor Statistics. Hilda Solis, secretary of labor who oversees the bureau, called the charge of gaming the numbers "ludicrous" and told CNBC, "I'm insulted when I hear that, because we have a very professional civil service organization." She said the people who put together the numbers are "highly skilled economists."

It was the first time since January 2009, when Mr. Obama took office, that the national unemployment rate has been below 8 percent.

Mr. Obama's campaign spokeswoman, Lis Smith, pointed out that over the past two and a half years, businesses have added 5.2 million jobs.

Wall Street ended the day with the Dow up 34.79 to close at 13,610.15, an increase of 0.26 percent, but the other two major indices were down slightly. Standard & Poor's 500 index was down .47 points, or 0.03 percent, to close at 1,460.93, and the Nasdaq was down 13.27 points, or 0.42 percent, to close at 3,136.19.

The overall employment report is based on two different surveys, one of households and the other of employers. The unemployment rate is determined by how many respondents in the household survey are not working but have looked for work in the past month. If someone has run out of unemployment insurance and is looking for work, that person would still be considered to be unemployed.

Based on the household survey, the bureau found there were 873,000 more people working in September than had been in August, and 456,000 fewer people who were unemployed.

The total number of unemployed people fell from 12.5 million to just more than 12 million. Another 418,000 people joined the labor force during the month.

There was some bad news. The number of people working part time because full-time work was not available grew by 582,000 to 8.6 million, and the average duration of unemployment grew from 39.2 weeks in August to 39.8 weeks in September.

Meanwhile, the survey of employers was, in part, good news because the numbers from the two previous months had been revised upward by a total 86,000 jobs, meaning the previous two months added more jobs than previously reported.

The bureau reported 114,000 nonfarm jobs were added in September, which puts the three-month average at 146,000 jobs.

Manufacturing posted a loss over the month of 16,000 jobs, with 3,400 jobs lost in manufacturing primary metals and the same number of jobs lost building motor vehicles and vehicle parts.

Harry Holzer, a professor of public policy at Georgetown University in Washington, D.C., said while there was a loss in September, manufacturing jobs have been gaining ground in the recovery.

"We've regained about 20 percent of the jobs that were lost in the recession, but only 10 percent of what we lost in the last decade," he said. Those jobs aren't just assembly line positions now, he said. Instead they demand technical skills that require post-high school education to master, and are becoming higher-paid jobs even in states that are not friendly to unions.

In the service industries, transportation and warehousing added 17,100 jobs, with 9,200 of those in transit and ground passenger transportation. That could be accounted for mostly by school bus drivers hired by private firms.

Mr. Holzer said other well-paying jobs added over the month include 13,000 jobs gained in professional and business services.

As for the 43,500 jobs added in health care, he said it is hard to know from the report if they are high-paying jobs because there is a huge range of occupations covered in that category from doctors to cleaners.

The government sector added a net of 13,000 jobs, with 13,000 new jobs at the state level and 4,000 new federal jobs, but 7,000 jobs cut by local governments.